Trevor's Budget for property owners
Property experts would be hard pressed to draw up a better budget for the homeowner than the one Trevor Manuel has just delivered. Last week I pointed out how the government collects taxes from its citizens with property owners being targeted through transfer duties, estate duty, stamp duties and Capital Gains Tax. On Wednesday The Honourable Minister of Finance, Trevor Manuel, substantially changed these taxes.
Capital Gains Tax
This R35 600 and R20 600 savings might not seem that substantial but it is very significant. This 'extra' amount that the homeowner has to pay up is usually not financed by the bank and therefore is money that the buyer has to fork out immediately on transfer and is effectively a deterrent to property buyers.
A consequence of this duty was to make new developments more attractive as the VAT payable in lieu of the Transfer Duty is payable by the developer and the purchaser has the ability to finance the full purchase price.
The change, therefore, is going to have an effect on the secondhand property market, making it easier for owners to sell and buy in the lower end of the market and making secondhand property more attractive. This stimulation at the lower end of the market is beneficial in two ways. The financial barrier has been lowered enabling more people to enter the market. Secondly this stimulation at the lower end of the market will trickle up the value chain.
So as commentators bemoan the budget as not having given enough back to business and the people, property owners should quietly be jumping for joy.
here for a full transcript of the budget speech.
Article by: Dave Welmans - www.thepropertygame.co.za